The memorandum has been prepared on the basis of the law and practice in Guernsey as at 1 April 2010.

Introduction  

A corporation ordinarily is not liable for the debts of other entities or for the debts of its owners in the absence of an express agreement, such as a guarantee. However, a creditor of one company may try to impose liability on one or more non-debtor entities under “alter ego” or “successor liability” theories in certain circumstances.

The Bankruptcy Court for the District of Delaware recently issued a decision that will undoubtedly influence strategies in bankruptcy cases involving plugging and abandonment liabilities. The court’s ruling in Venoco, LLC v. City of Beverly Hills illuminates the Bankruptcy Code’s rehabilitative purposes by explaining that financial harm, without more, is not sufficient to enjoin a debtor’s actions.

What Happened

Ignite Restaurant Group (“Ignite”) filed a voluntary petition for Chapter 11 bankruptcy protection in the Southern District of Texas, Houston Division today (Case no. 17-33550). Ignite operates 137 Joe’s Crab Shack and Brick House Tavern + Tap restaurants, including three international franchise locations in Dubai. Ignite employs 8,400 people, including 2,900 full-time (both salaried and hourly) employees. Ignite’s bankruptcy schedules list $197 million in liabilities and $153 million in assets.

NNN 400 Capitol Center, LLC, a single asset real estate debtor, has filed a petition for relief under Chapter 11 in the Bankruptcy Court for the District of Delaware. According to the Petition, the Debtor estimates its assets and liabilities to both be between $10MM – $50MM.

The Supreme Court's decision in Lehman Waterfall I was handed down this morning. DLA Piper represents one of the successful appellants, Lehman Brothers Limited (in administration) (LBL).

The court was asked to consider certain issues relating to distributions in the estate of Lehman Brothers International (Europe) (LBIE), an unlimited company in administration. Such issues arose due to a substantial anticipated surplus in LBIE and sought to resolve particular lacunas in UK insolvency legislation.

Rue21 Inc. (“Rue21”) filed for Chapter 11 bankruptcy protection in Pittsburgh, PA on Monday (case no. 17-22045-GLT, Western District of Pennsylvania).

This week’s TGIF considers Linc Energy Ltd (in Liq) v Chief Executive Dept of Environment & Heritage Protection [2017] QSC 53, in which the Queensland Supreme Court directed that the liquidators of Linc Energy were not justified in causing it to fail to comply with an environmental protection order

BACKGROUND

Introduction:

Introduction

The Sapin II Act of November 8 2016 amended the regime governing directors' liability in an insolvency scenario in order to encourage the recovery of honest directors of failed businesses.